This report updates the maximum statutory valuation rate and nonforfeiture interest rate for calendar year 2023 issues of life insurance products and the maximum statutory valuation interest rates for calendar year 2022 issues of annuity products.
VM-22 was adopted with an effective date of January 1, 2018, and prescribes the interest rates to be used when valuing single premium immediate annuities and other similar contracts or supplementary contracts.
The Tax Cuts and Jobs Act of 2017 amends the requirements of reserves calculated under section 807(d) for taxable years beginning after December 31, 2017. Section 13517 of the act no longer requires reserves to be computed using the greater of the Applicable Federal Interest Rate and the prevailing state assumed interest rate. Section 807(d) as amended requires the use of the rate used for statutory reserving, as life insurance reserves for taxable years beginning after December 31, 2017, are determined, in part, based on the reserve computed as required by the National Association of Insurance Commissioners (NAIC) at the time the reserve is determined. We will no longer update the Applicable Federal Interest Rate due to this change.
VM-20 was adopted with an effective date of January 1, 2017. Companies were given a three-year window to adopt VM-20, with mandatory adoption by January 1, 2020. VM-20 prescribes the interest rates to be used when valuing certain life insurance products issued after the mandatory adoption date or company adoption date, if earlier.
The Consolidated Appropriations Act of 2021 was passed December 27, 2020, and changes the rates used for 7702 testing of life insurance contracts for issues on or after January 1, 2021. The rate used for the Cash Value Accumulation Test is also the minimum for the nonforfeiture interest rate for life insurance under VM-02. This document reflects that change.
Bond yields were flat in the second half of 2021, and then steadily increased from about 3% in December 2021 to about 4.5% in June 2022.
Highlights include:
| Title | File Type | File Size |
|---|---|---|
| 2022 Prescribed US Valuation Interest Rate Report | 1.1 MB |
